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2011 Israeli VAT cut withdrawn

Lorys Charalambous, Tax-News.com, Cyprus

15 December 2010


The planned Israeli VAT cut from 16% to 15.5%, scheduled for January 1, 2011, has been withdrawn. The Knesset Finance Committee decided to pull the tax cut in light of the challenging economic conditions.

The Israel VAT rate was originally increased from 15.5% to 16.5% in July 2009 as a temporary measure to help reduce the worsening government deficit in the midst of the global economic downturn. It was then reduced to 16% in January 2010, and was scheduled to return to 15.5% in 2011.

Liat Shibolet of TMF VAT Services, Israel commented: “The Knesset will be hoping they can implement the cut by 2013. Israel is facing the same economic headwinds as other countries who are implementing VAT or GST rises – such as the UK, Spain, Ireland and New Zealand. This is forcing them into increasing consumption taxes whilst holding down business taxes.”

TAGS: tax | business | value added tax (VAT) | Israel | tax rates

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